Koushik Chatterjee, Tata Steel's group executive director, said it had been a long and detailed process but this was an "important milestone in Tata Steel UK's journey towards a sustainable and enduring future".

He added: "Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the regulated apportionment arrangement (RAA) presents the best possible structural outcome for the members of the BSPS and for the Tata Steel UK business."

Trade unions Community, GMB and Unite said: "For over a year our members have feared for their security in retirement and this announcement helps to bring that uncertainty to an end."

But they added that members had been "extremely disappointed at the unacceptable lack of communication" in recent months.

"This has to change immediately," said the unions in a statement. "The company and the trustees must remember they are dealing with people's long term future, their life savings and their family's financial security; it is vital members are given all the support that they need."

Current and former steelworkers have watched their pensions being tampered with.

Next they will be faced with what could be a mind-boggling choice about what to do.

The British Steel Pension Scheme trustees say the new scheme with trimmed benefits will be better for the vast majority than falling back on the Pension Protection Fund.

But there are a lot of variables to consider: the age at which they want to retire, the tax-free lump sum they can get, or whether they should accept the tempting sums being offered to exit the scheme entirely.

It is very important, the trustees admit, that members make an informed choice after taking advice "including from an independent financial advisor".

But who will pay for that? The trustees won't, and the Pensions Regulator won't make them.

There will be leaflets and written information, but many workers will feel they are being left on their own to make one of the most important financial decisions of their lives.

Lesley Titcomb, chief executive of The Pensions Regulator, said: "We do not agree to these types of arrangements lightly but after several months of robust negotiations in this case, we believe that it is the best possible outcome for everyone involved in what is a very difficult situation."

BSPS trustees chairman Allan Johnston said: "It is the best outcome that could be achieved in the circumstances."

Aberavon MP Stephen Kinnock said it was important to remember that the agreement to the pension changes was contingent upon substantial investment from Tata.

"It is vital that Tata follow through on their £1bn investment plan to ensure Port Talbot and downstream sites remain at the leading edge of 21st Century steel-making," he said.

The UK Government said it would "continue to work closely with the sector to help secure a viable long-term future for the UK steel industry."

Image copyrightChristopher Furlong/Getty Images

Analysis by Brian Meechan, BBC Wales business correspondent

Tata had been warning for years that its business in the UK was under threat.

It blamed falling steel prices as well as high energy costs and business rates in the UK compared to many other EU countries.

Pensions was not one of the main reasons it gave for its concerns but it clearly was an issue.

The company attempted to radically reduce the benefits its scheme provided but that was seen off with the threat of strike action by unions.

Less dramatic changes to pensions were agreed instead.

When Tata announced it was selling its UK operations, it started to see action in areas it had long been complaining about.

The UK government introduced financial help for heavy energy using industries like steel.

Then as you can see from the chart above, prices started to rise; the Port Talbot plant became more efficient and the drop in the value of the pound made selling overseas easier.

The dispute over pensions took many twists along the way, including an aborted attempt to change the law for the Tata scheme that many felt would set a dangerous precedent.

What has now been agreed instead is highly unusual.

Tata will still have some responsibilities over the huge £15bn pension fund but it will now be expected to stand on its own two feet with an injection of £550m to help plug its black hole and a third stake in the company's UK operations for the new scheme.

It paves the way for a merger deal between Tata Steel and its German rival, Thyssenkrupp.

Whether that deal is actually good for the future of Port Talbot is still a hotly-contested point.

The pension changes along with the tackling of issues like energy costs and cheap imports put Tata's UK operations - which are now largely based in Wales - on a more solid foundation.

However, the world is still making far more steel every year than it needs.

China still has newer steelworks as well as lower labour and energy costs, so will remain fiercely competitive.

Tata's promised future investment in Port Talbot is tied to its performance.

The immediate danger may have receded but there are still many challenges ahead.